Namibia’s banking sector liquidity climbed sharply to an average of N$8.1 billion in August 2025, up from N$5.8 billion in July, mainly on the back of strong inflows from diamond sales.
According to Simonis Storm Junior Economist, Almandro Jansen, the increase helped ease the tighter funding conditions observed earlier in the year.
“The surge in liquidity was mainly driven by inflows from diamond sales, which boosted market liquidity conditions and provided relief to the funding environment after the mid-year squeeze,” Jansen said.
On the external front, Jansen reported that the Bank of Namibia’s international reserves fell by 1.9% month-on-month to N$57 billion at the end of August, down from N$58.1 billion in July.
He attributed the decline to higher government foreign payments and commercial bank withdrawals of Customer Foreign Currency balances.
“Import cover weakened slightly to 3.7 months, or 4.2 months excluding oil-related exploration imports. While still above adequacy thresholds to safeguard Namibia’s currency peg, this reflects mounting pressure on reserves from fiscal and capital account outflows,” he said.
Jansen noted that the August data reflected a contrasting liquidity environment, where strong export earnings replenished domestic liquidity even as external buffers came under strain.
Broad money supply growth moderated to 10.2% year-on-year in August, from 10.4% in July, signalling weaker long-term deposit growth, particularly among other financial corporations, as well as softer net claims on the central government.
“Currency outside depository corporations slowed to 10.7% from 12.8% in July, while other deposits eased to 12.2% from 12.8%. Transferable deposits, however, remained stable at 8.4% year-on-year, supported by steady business demand,” Jansen explained.
On inflation, Jansen said the consumer price index eased to 3.2% in August from 3.5% in July, continuing a disinflationary trend that has persisted since the start of the year.
“While inflation remains comfortably within the Bank of Namibia’s 3 to 6% target range, risks are shifting upward for the remainder of 2025. Imported cost pressures remain the principal concern, with the 30% U.S. tariff on South African vehicle and machinery exports, as well as ongoing tariff reviews on Chinese goods, likely to reshape supply chains and feed into domestic prices,” he said.
He added that lower fuel prices, alongside softer food, housing, and utilities inflation, were the main factors behind the recent slowdown in price growth.
